The futures market in the first half of 2026 delivered a powerful lesson on "expectation reversal" to all participants.
At the start of the year, gold and silver prices surged rapidly, both reaching new all-time highs. Gold briefly exceeded $5,500 per ounce, while Shanghai copper hit a peak of 114,160 yuan per tonne on January 30th. The market was euphoric, with talk of a new "commodity supercycle" widespread.
By the end of June, however, the picture had completely changed. Gold not only gave back all its gains but ended the first half down 7.51% for spot London gold; silver prices nearly halved from their early-year highs; and Shanghai copper experienced sharp volatility, falling before recovering.
In just six months, the market mood shifted from "frenzied chasing" to "rapid cooling."
This interplay of hot and cold points to a central question: Is the market actually pricing in the "Kondratieff Wave transition"?
Understanding the Kondratieff Wave Concept
First, let's clarify the concept. The Kondratieff Wave, or long wave cycle, is an ultra-long economic cycle of 50-60 years proposed by economist Nikolai Kondratieff. A complete cycle consists of four phases: recovery, prosperity, recession, and depression, driven by the clustering of major technological revolutions.
Currently, the global economy is at a critical juncture, transitioning from the fifth wave (Information Technology) to the sixth wave (AI, new energy, biotechnology). To use a seasonal analogy, we are in the late winter/early spring phase—old technological dividends are fading, while new technologies are approaching commercial critical mass.
What does this "Kondratieff Wave transition" imply? In essence, it signifies the unraveling of old wealth creation logic and the formation of new pricing anchors.
For futures market participants, this is not merely an academic topic; it directly impacts the underlying narrative being traded for any held position.
Three Evident Market Pricing Trends
Trend One: Precious Metals Lead the Reaction
In January 2026, driven by expectations of Federal Reserve rate cuts and sustained buying inflows, gold and silver prices soared to record highs. Gold briefly topped $5,500/oz. Institutional analysis suggested that during a Kondratieff depression phase, expanding cracks in US dollar credibility, coupled with heightened global geopolitical uncertainty, had initiated a second commodity supercycle. Gold's monetary attributes cause it to rise first when confidence in the credit system wavers.
The situation changed, however. The outbreak of US-Israel-Iran hostilities in late February and the blockade of the Strait of Hormuz caused a sharp spike in international crude oil prices. The market's primary narrative shifted from "rate cuts + safe-haven" to "re-inflation and monetary tightening amid an energy shock." Persistently stronger-than-expected US economic and inflation data shifted market expectations for the Fed from cuts to hikes. As a highly liquid asset, gold was among the first to be sold for cash during market panic and liquidity tightening driven by rate hike fears, leading to significant capital outflows.
Spot London gold ended the first half down 7.51%. In just six months, precious metals completed a full cycle from "frenzied chasing" to "rapid cooling."
Trend Two: Industrial Metals Take the Baton
Shanghai copper fell first then rose in the first half. After peaking at 114,160 yuan/tonne on January 30th, it plunged to a low of 91,500 yuan/tonne on March 23rd before recovering and consolidating at high levels between 102,000 and 108,000 yuan/tonne. The average copper price for the first half reached 101,831.68 yuan/tonne, a year-on-year increase of 25.69%.
The sustained high price of copper is supported by both supply and demand factors. On the supply side, copper concentrate treatment and refining charges (TC) hit a historic low of -$120.70 per tonne. Global copper mine output has been declining since Q3 2025. On the demand side, consumption from emerging industries like AI data centers and new energy vehicles continues to grow. Copper is transforming from a traditional cyclical commodity into the "physical foundation" for new industries.
Trend Three: Accelerating Commodity Rotation
Analysts have previously outlined the transmission chain for commodity price increases, roughly in this order: precious metals react first—as seen in the steep rise of gold and silver in January-February; followed by base metals like copper and aluminum, and some minor metals tied to the AI narrative; the third wave involves energy and chemical products; and finally, agricultural products.
Further influenced by geopolitical factors like the Strait of Hormuz blockade, the market widely expects the 2026 trends for energy/chemicals and agricultural products to be more pronounced. In the first half, the chemical sector index rose from 121 points at the start of the year to 163.68 points. In agriculture, egg futures performed notably well, with June trading volume surging 540% year-on-year. Within the agricultural complex, palm oil, soybeans, and corn are viewed more favorably for the second half.
Three Unresolved Market Divergences
The trends above indicate the market is indeed pricing in certain dimensions of the "Kondratieff Wave transition." But has it been fully priced? Currently, at least three key divergences remain unanswered.
Divergence One: Are We in the "Depression Phase" or on the "Eve of Recovery"?
This is the most significant cognitive divide. The mainstream view holds that we are at the tail end of the fifth wave's depression phase, about to enter the sixth wave's recovery cycle. Under this framework, the underlying logic for a commodity supercycle is "trading the cracks in US dollar credibility."
An alternative view suggests the current period is not the "depression" of the old wave but the early stage of a new wave driven by a new set of general-purpose technologies. Renewable energy, artificial intelligence, and embodied AI are seen as the primary industrial drivers of this long cycle.
This divergence is crucial. If it's the "end of depression," the pricing logic for commodities is "supply constraints + credit devaluation"—driven by scarcity and safe-haven appeal. If it's the "eve of recovery," the logic shifts to "explosive new technology demand"—driven by future growth stories. Which narrative is the market trading? The two logics point to entirely different commodities and timing.
Divergence Two: Is AI Truly the "Engine" of a New Wave?
Optimists believe AI is spearheading a new technological revolution. However, some market views argue that AI does not currently constitute a Kondratieff recovery. Such a recovery requires a hardware revolution that translates into industrial applications—like the IBM-PC in 1982. Current AI developments have lowered barriers to entrepreneurship but have not yet created large-scale new industrial demand.
If this assessment holds, it implies that the "AI premium" embedded in current industrial metal price increases might contain elements of a bubble. When will AI find true industrial-scale application? This timing gap may not be fully priced in by the market.
Divergence Three: How Far Can the Supercycle Go?
Optimists assert that a second commodity supercycle has already begun. However, Shanghai copper is already trading above 100,000 yuan/tonne. A historically high price is a double-edged sword—excessive prices can erode demand.
Is the market pricing the "beginning of a cycle" or the "exhaustion of a cycle"? No one can provide a definitive answer to this question at present.
An Objective Assessment: The Transition is Partially Priced
Based on the above analysis, an objective judgment is that the market has priced the "direction of the transition" but not yet the "magnitude and pace."
Reason One: Correct Direction, Possibly Linear Expectations
The underlying logic for a commodity supercycle during a Kondratieff depression—cracks in US dollar credibility plus supply constraints—is widely accepted by the market, as evidenced by the rise in gold, copper, and aluminum.
However, the essence of a "depression phase" is turbulence and chaos, not a linear uptrend. The "rollercoaster" ride of gold in the first half of 2026 is the prime example—soaring to $5,500/oz early in the year before falling back near $4,000/oz by mid-year. The market's expectation of a "continuous rise" underestimates the inevitable violent volatility accompanying a Kondratieff transition. The transition is not a smooth upward curve but a process fraught with reversals and oscillations.
Reason Two: A Timing Gap Between Old and New Drivers
There is consensus that old technology dividends are waning while new technologies approach a commercial critical point. But when will this "critical point" truly arrive? Industrial-scale AI applications have not yet been widely deployed. If AI does not currently constitute a Kondratieff recovery, then an uncertain time lag exists between "AI concept" and "AI creating large-scale industrial demand." The market may be overestimating the speed of the "transition" and underestimating the time required.
Reason Three: China's Unique Position in the Kondratieff Depression
A repeatedly observed pattern during Kondratieff depressions is that they often coincide with prosperity for "catch-up" nations.
On the surface, some economic characteristics of China in 2026 resemble those of Japan in 1978: economic growth shifting from high-speed to medium-to-high-quality development, while facing common issues like overcapacity, high household savings propensity, and weak real credit demand. However, the stages of the Kondratieff cycle, the external global environment, and exchange rate drivers differ fundamentally, making a direct comparison for asset price projections inappropriate.
Current domestic variables unique to China—such as the potential for RMB appreciation, ongoing upgrades in high-end manufacturing, and steady medium- to long-term foreign capital inflows—collectively shape a distinct pricing logic for domestic commodity futures compared to overseas markets. Has the market fully factored in this layer of exclusive "China premium"? It appears not yet.
Key Considerations for Futures Trading
In light of the analysis above, what should futures traders prioritize?
First, Prioritize Rotation Rhythm Over Betting on a Single Commodity
The four-stage transmission from precious metals to industrial metals to energy/chemicals to agricultural products does not occur simultaneously. The pattern of energy/chemicals in the first half of 2026 and agricultural products in the second half itself provides a tradable clue within the Kondratieff framework. With gold and copper having already experienced a rally, will energy and agricultural products see more pronounced performance next? This warrants continued observation.
Second, Manage Volatility as a Key Variable
During a Kondratieff transition, high volatility is not an anomaly but the norm. For futures participants, managing volatility may be as important as judging direction.
Third, Distinguish Between "Kondratieff Logic" and "Short-Term Narratives"
Not every commodity price increase can be explained by the Kondratieff Wave. Within this framework, the assets with genuine long-term pricing logic are threefold: strategically constrained resources on the supply side; "physical foundation" materials tied to new technology demand; and precious metals that hedge against credit system risks.
Other short-term rallies may simply be noise.
Concluding Thoughts
The futures market in the first half of 2026 offered a crucial reminder: the cycle is speaking, but few are truly listening.
We are in a window where the old order is disintegrating and a new one is being built. The market's many contradictory voices are all footnotes to this transitional period. The "Kondratieff Wave transition" is not a precisely timed event but an unfolding process. The market is pricing it, but it is far from done.
For futures participants, the greatest risk may not be misjudging the direction, but using a short-cycle mindset to trade a long-cycle logic. The Kondratieff pendulum has begun to swing. The question is not whether it will swing our way, but what rhythm we use to follow it.
All content is for reference only and does not constitute practical trading advice. Futures markets carry risks; trade with caution.
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